By EeeVee
“You can make money on anything but crypto.”
The cryptocurrency market and other global financial sectors appear to be experiencing vastly different fortunes recently. While traditional assets have soared, Bitcoin’s performance has been notably subdued, creating a stark contrast often described as “fire and ice.”
Throughout 2025, gold surged over 60%, silver skyrocketed an astounding 210.9%, and the U.S. stock market’s Russell 2000 index climbed 12.8%. Bitcoin, however, after a brief flirtation with new highs, concluded the year with an annual decline.
The divergence only intensified as 2026 began. By January 20th, both gold and silver were setting new records, the Russell 2000 index had outperformed the S&P 500 for eleven consecutive days, and China’s STAR Market (SSE Sci-Tech Innovation Board 50 Index) posted a monthly gain exceeding 15%. In stark contrast, Bitcoin suffered six consecutive daily losses by January 21st, plummeting from $98,000 and decisively breaking below the $90,000 mark.
Since late 2024, capital seems to have decisively shifted away from the crypto space. Bitcoin has been consolidating below $100,000 for over three months, leading to what many describe as “the lowest volatility period ever.”
A palpable sense of disappointment pervades crypto investors. Those who’ve found success in other markets now jest about the “ABC” secret: “Anything But Crypto,” implying profitability everywhere except in digital assets.
The “Mass Adoption” many anticipated in the last cycle has indeed arrived, but not in the form of widespread decentralized application usage. Instead, it’s a Wall Street-led, comprehensive “assetization” of cryptocurrencies.
This cycle has seen unprecedented embrace of cryptocurrencies by the U.S. establishment and Wall Street. The SEC approved spot ETFs; BlackRock and JPMorgan are allocating assets to Ethereum; the U.S. is integrating Bitcoin into its national strategic reserves; several state pension funds have invested in Bitcoin; and even the NYSE has announced plans to launch a cryptocurrency trading platform.
This raises a crucial question: Why, despite such significant political and capital endorsements, has Bitcoin’s price performance been so underwhelming while precious metals and stock markets reach new highs? And why, when crypto investors routinely check pre-market U.S. stock prices to gauge crypto trends, is Bitcoin failing to follow these rallies?
Why Is Bitcoin Underperforming?
A Leading Indicator’s Warning
Bitcoin has long been considered a “leading indicator” for global risk assets. As Real Vision founder Raoul Pal has frequently highlighted, Bitcoin’s price is primarily driven by global liquidity, largely uninfluenced by individual national earnings reports or interest rates. Consequently, its volatility often precedes that of mainstream risk assets like the Nasdaq index.
Data from MacroMicro corroborates this, showing Bitcoin’s price turning points have repeatedly preceded those of the S&P 500 in recent years. Therefore, a stagnation in Bitcoin’s upward momentum, preventing it from reaching new highs, serves as a potent warning signal that the upward trajectory of other assets might also be nearing its limit.
Persistent Liquidity Tightening
Secondly, Bitcoin’s price remains highly correlated with global net dollar liquidity. While the Federal Reserve implemented interest rate cuts in 2024 and 2025, the quantitative tightening (QT) initiated in 2022 continues to drain liquidity from the market. Bitcoin’s new highs in 2025 were largely fueled by fresh capital inflows from new ETFs, but this did not fundamentally alter the broader macro environment of tight global liquidity. Bitcoin’s prolonged sideways movement is a direct reflection of this reality; a super bull market is challenging to ignite in a cash-constrained environment.
Adding to this, Japan, the world’s second-largest source of liquidity, has also begun tightening. In December 2025, the Bank of Japan raised its short-term policy rate to 0.75%, the highest level in nearly three decades. This move directly impacted the Japanese Yen (JPY) carry trade, a significant funding source for global risk assets over the past few decades.
Historical data indicates that each of the Bank of Japan’s three rate hikes since 2024 has coincided with a Bitcoin price drop exceeding 20%. The synchronized tightening by both the Federal Reserve and the Bank of Japan is exacerbating the global liquidity crunch.
Escalating Geopolitical Conflicts
Finally, the constant threat of geopolitical “black swans” keeps market nerves frayed. A series of domestic and international actions by the Trump administration in early 2026 has pushed this uncertainty to new heights.
Internationally, the Trump administration’s actions have been unpredictable. From military intervention in Venezuela and the unprecedented arrest of its president in modern international relations, to renewed saber-rattling with Iran; from attempts to forcibly purchase Greenland, to new tariff threats against the European Union – this aggressive unilateralism is escalating major power conflicts across the board.
Domestically in the U.S., his actions have sparked deep concerns about a constitutional crisis. He not only proposed renaming the “Department of Defense” to the “Department of War” but has also ordered active-duty troops to prepare for potential domestic deployment.
These moves, combined with his past remarks regretting not using the military to intervene and his unwillingness to accept defeat in the mid-term elections, fuel growing public anxiety: would he refuse to accept an electoral loss and use force to retain power? Such speculation and heightened pressure are intensifying internal U.S. divisions, with protests showing signs of expansion nationwide.
Last week, Trump invoked the Insurrection Act and deployed troops to quell protests in Minnesota, followed by the Pentagon ordering approximately 1,500 active-duty soldiers stationed in Alaska to standby.
This normalization of conflict is dragging the world into a “gray zone” between localized wars and a new Cold War. Traditional, full-scale hot wars often have clearer trajectories, market expectations, and have even been accompanied by liquidity injections to “save” markets. However, these localized conflicts are fraught with extreme uncertainty, full of “unknown unknowns.” For venture capital markets, which heavily rely on stable expectations, such uncertainty is fatal. When large capital cannot predict future directions, the most rational choice is to increase cash holdings, observe from the sidelines, rather than allocate funds to high-risk, high-volatility assets.
Why Are Other Assets Not Falling?
In stark contrast to the crypto market’s quietude, precious metals, U.S. stocks, and China’s A-shares have seen successive rallies since 2025. However, these market surges are not driven by a universal improvement in macroeconomic and liquidity fundamentals. Instead, they represent structural market trends, propelled by sovereign will and industrial policies amidst intense great power competition.
Gold’s Resurgence: A Sovereign Response
Gold’s ascent is a direct response by sovereign nations to the current international order, rooted in the erosion of trust in the U.S. dollar system. The 2008 global financial crisis and the 2022 freezing of Russian foreign exchange reserves shattered the myth of the U.S. dollar and U.S. Treasuries as “risk-free” ultimate reserve assets. In this context, global central banks have become “price-insensitive buyers.” Their motivation for buying gold isn’t short-term profit, but rather to secure an ultimate store of value independent of any single sovereign credit.
Data from the World Gold Council shows that global central banks’ net gold purchases exceeded 1,000 tons for two consecutive years in 2022 and 2023, setting historical records. This rally in gold is predominantly driven by official forces, not market-driven speculative capital.
Comparison of gold and U.S. Treasury holdings in sovereign central bank reserves, with total gold reserves surpassing U.S. Treasuries in 2025.
Stock Market Rallies: Industrial Policy at Play
The rise in stock markets reflects national industrial policies. Whether it’s the U.S.’s “AI Nationalization” strategy or China’s “Industrial Self-Reliance” directive, state power is deeply intervening and guiding capital flows.
In the U.S., through the CHIPS and Science Act, the artificial intelligence industry has been elevated to a strategic national security priority. Capital is visibly shifting from large-cap tech stocks towards more growth-oriented small and medium-sized companies that align with policy directives.
Similarly, in China’s A-share market, capital is highly concentrated in sectors closely tied to national security and industrial upgrading, such as “Information Innovation” and “Defense Industry.” These government-strongly-led market trends possess a pricing logic fundamentally different from Bitcoin, which relies on purely market-driven liquidity.
Will History Repeat Itself?
Historically, this isn’t the first time Bitcoin has diverged in performance from other assets. And each time, such divergence has ultimately concluded with a robust rebound for Bitcoin.
There have been four instances where Bitcoin’s Relative Strength Index (RSI) against gold dropped below 30, signaling an extremely oversold condition: in 2015, 2018, 2022, and 2025.
On each occasion, when Bitcoin was severely undervalued relative to gold, it foreshadowed a significant rebound in the Bitcoin/gold exchange rate or Bitcoin’s price itself.
In 2015, at the tail end of a bear market, Bitcoin’s RSI against gold fell below 30, subsequently ushering in the super bull market of 2016-2017.
In 2018, amidst a bear market, Bitcoin plummeted over 40% while gold rose nearly 6%. After its RSI dropped below 30, Bitcoin rebounded over 770% from its 2020 low.
In 2022, during another bear market, Bitcoin fell almost 60%. Following an RSI dip below 30, Bitcoin rebounded, once again outperforming gold.
From late 2025 until now, we are witnessing this historic oversold signal for the fourth time. Gold soared 64% in 2025, and Bitcoin’s RSI relative to gold has once again entered the oversold territory.
Is Chasing Other Assets a Prudent Move Now?
Amidst the “Anything But Crypto” fervor, hastily divesting from crypto assets to chase seemingly more prosperous markets could prove to be a perilous decision.
Historically, when U.S. small-cap stocks begin to lead the market, it often signals the final euphoric stage before liquidity exhaustion at the end of a bull run. The Russell 2000 index has already surged over 45% from its 2025 lows, yet many of its constituent companies have weaker profitability and are highly sensitive to interest rate changes. Should the Federal Reserve’s monetary policy deviate from market expectations, the inherent fragility of these companies could quickly be exposed.
Furthermore, the exuberance surrounding the AI sector is exhibiting classic bubble characteristics. Both Deutsche Bank surveys and warnings from Bridgewater Associates founder Ray Dalio have identified an AI bubble as the greatest market risk for 2026.
Star companies like Nvidia and Palantir have reached historical valuation highs, with increasing skepticism about whether their profit growth can sustain such elevated figures. A deeper risk lies in the massive energy consumption of AI, which could trigger a new wave of inflationary pressure, forcing central banks to tighten monetary policy and potentially burst asset bubbles.
According to Bank of America’s January fund manager survey, global investor optimism has reached its highest level since July 2021, with growth expectations soaring. Cash holdings have plummeted to a record low of 3.2%, and protection against a market pullback is at its lowest since January 2018.
On one side, we observe surging sovereign assets and widespread investor optimism; on the other, escalating geopolitical conflicts. In this grand context, Bitcoin’s “stagnation” is more than just underperformance. It acts as a sober signal, an early warning of greater impending risks, and a period of accumulating strength for a more profound narrative shift. For true long-term investors, this is precisely the moment to test conviction, resist temptation, and prepare for the crises and opportunities that lie ahead.
